JPMorgan Chase & Co. (JPM:US), the biggest
U.S. bank, reached a settlement with regulators to resolve
claims tied to its home-loan business and said it would buy back
as much as $3 billion of shares.

The agreement in principle with the U.S. Securities and
Exchange Commission covers two investigations related to
mortgage-backed bonds handled by JPMorgan and Bear Stearns Cos.,
which the bank acquired in 2008, New York-based JPMorgan said
today in a filing.

“The firm has reached an agreement in principle with the
staff of the SEC to resolve” some claims, JPMorgan said in the
filing. “The agreement in principle is subject to approval by
the SEC, as well as court approval.”

The SEC has issued notices to banks including JPMorgan in
probes focusing on mortgage securities and whether lenders
failed to disclose underlying credit weaknesses. Goldman Sachs
Group Inc. paid $550 million in 2010 to settle SEC claims that
it misled investors on a mortgage-linked investment in 2007. In
that case, Goldman Sachs said it made a “mistake” in omitting
disclosures.

One investigation related to delinquency disclosures in a
single mortgage-backed security deal, JPMorgan said in today’s
filing. The other involved claims against the lender and Bear
Stearns over disclosures of settlements of disputes against
originators of loans included in Bear Stearns securitizations.

SEC Warning

The SEC warned JPMorgan in January that it may bring
complaints related to mortgage securitizations, the company said
in February. Goldman Sachs and Wells Fargo & Co. also said they
were facing U.S. scrutiny over mortgages.

Regulators are still examining how banks packaged and sold
home loans to investors more than four years after mounting
mortgage defaults prompted unprecedented government bailouts of
the financial system.

JPMorgan also won Federal Reserve approval to reinstate a
$3 billion buyback of common shares in next year’s first
quarter, according to today’s filing. The Fed notified the bank
Nov. 5 that it reviewed the firm’s capital plan and wouldn’t
object, the bank said.

JPMorgan announced a $15 billion repurchase program in
March and suspended it in May after uncovering a trading loss at
its chief investment office that eventually swelled to more than
$6.2 billion. The bank was scheduled to spend as much as $12
billion on buybacks this year and up to $3 billion in the first
three months of 2013.

‘Good News’

“We regard this as very good news that will likely lift
all money center banks today as it appears the Fed is still
quite open to allowing stock repurchases,” Ed Najarian, an
analyst at International Strategy & Investment Group LLC, wrote
in a note to clients today.

JPMorgan rose 1.9 percent to $41.26 at 8:52 a.m. in New
York. The shares have risen 22 percent this year.

Chief Executive Officer Jamie Dimon said in August that he
intended to resume repurchases in the first quarter. Doing so
depended on the Fed and on the board’s completion of work on the
CIO’s wrong-way bets, he said at the time.

The timing and amount of common stock and warrant
repurchases depends on market conditions, JPMorgan said today.

To contact the reporter on this story:
Zachary Tracer in New York at
ztracer1@bloomberg.net

To contact the editor responsible for this story:
David Scheer at
dscheer@bloomberg.net